Commentary and Tracking of a Portfolio of Stocks using approach from "The Little Book that Beats the Market" by Joel Greenblatt aka Magic Formula Investing

Sunday, December 01, 2013

Monthly Tracking Portfolio - November 23rd, 2012

November 23rd 2012 Monthly Tracking Portfolio

Another month has zipped by. As my faithful readers know, I have been tracking the Magic Formula Stocks as described by Joel Greenblatt in The Little Book That Beats the Stock Market since January 2006. Every month I take the top 50 stocks over $100m market cap from his website and track how that portfolio of stocks fares versus the Russell 3000 for the next 12 months. It has been an uphill struggle as the tracking portfolios have under-performed, driven in part by Chinese reverse merger fiascos, for-profit education stocks and home health care stocks all being proverbial albatrosses.

Fearless readers will recall we had a 29 month "losing streak".. This month-end extended the winning streak to 6! It went up an excellent 45.7 %,stomping the R3K, which was up a less excellent 32.1%! I will note that this portfolio ran an extra week as I like to start a new one the last Friday of every month. Here are the 50 stocks in descending performance order:

Stock

Initial
Price

End
Price

Percent Change

52 week
low

Mkt Cap

GTAT

3.36

9.81

192.0%

2.61

400

SAVE

16.85

45.87

172.2%

16.47

1,222

CPLA

27.42

65.72

139.7%

26.96

351

ESI

17.00

38.99

129.4%

11.69

397

QCOR

25.72

58.01

125.5%

24.56

1,543

EXPR

12.21

24.61

101.6%

13.70

1,059

WCRX

11.55

22.93

98.5%

10.85

2,993

RPXC

8.80

16.52

87.7%

8.60

459

STX

26.20

49.04

87.2%

25.16

10,533

GME

26.16

48.25

84.4%

22.30

3,273

DLX

28.76

49.69

72.8%

28.62

1,500

UIS

16.36

27.47

67.9%

15.68

718

JCOM

28.61

47.97

67.7%

29.70

1,317

USNA

43.98

73.11

66.2%

30.51

638

SAI

10.55

17.42

65.1%

N/A

3,974

RTN

54.35

88.68

63.2%

52.24

18,546

AFAM

17.42

27.90

60.2%

17.66

179

HSII

11.40

18.24

60.0%

12.20

212

CA

21.34

33.00

54.6%

21.67

10,122

DELL

9.31

13.86

48.9%

8.69

16,560

PETS

10.61

15.78

48.7%

10.69

222

VG

2.24

3.31

47.8%

2.25

499

LPS

24.11

35.11

45.6%

21.23

2,078

POZN

5.43

7.90

45.5%

4.26

164

MSFT

26.89

38.13

41.8%

26.26

233,289

NATR

13.55

19.19

41.6%

12.91

238

USMO

10.53

14.69

39.5%

10.94

241

APOL

18.86

26.29

39.4%

15.98

2,117

PDLI

7.03

9.77

39.0%

6.50

1,441

AGX

17.39

23.45

34.8%

13.90

248

BAH

13.08

17.49

33.7%

12.51

1,918

NTI

19.17

25.40

32.5%

17.83

403

TZOO

17.28

21.48

24.3%

17.42

274

GNI

60.03

73.68

22.7%

61.50

107

VCI

24.67

29.36

19.0%

23.69

1,006

MANT

24.27

28.77

18.5%

23.20

928

KLIC

10.68

12.62

18.2%

10.08

792

CSCO

18.29

21.25

16.2%

18.95

100,059

HFC

42.66

47.98

12.5%

38.98

9,257

MSB

20.91

22.30

6.6%

17.07

295

DMRC

17.65

18.73

6.1%

17.92

128

CF

207.90

217.38

4.6%

169.33

13,210

BDSI

4.77

4.80

0.6%

3.52

146

INTX

8.05

7.74

-3.9%

7.71

157

TNAV

7.51

7.04

-6.3%

4.91

309

IDCC

39.60

33.89

-14.4%

31.83

1,695

NSU

4.27

3.27

-23.4%

2.65

881

STRA

49.44

37.15

-24.9%

36.50

587

EGY

8.09

6.05

-25.2%

5.03

468

POOSF

5.19

-

-100.0%

-

420

This is the first tracking portfolio in decades (ok maybe not that long) where the For profit Education Stocks were NOT a drag. The 4 of them were up on average by a whopping 71%. And there were six stocks up 100% or more (including GTAT). I do think things are continuing to change. You can see that in the next table!

Here is a listing of every portfolio I have tracked:

Average
of Percent Change

Date

Total

IWV

1/6/2006

16.0%

10.9%

2/17/2006

21.2%

14.6%

3/29/2006

13.0%

9.6%

4/7/2006

10.3%

12.1%

5/12/2006

20.4%

18.6%

5/31/2006

29.2%

23.3%

6/30/2006

22.4%

20.0%

7/31/2006

19.7%

17.3%

8/31/2006

13.0%

13.3%

9/28/2006

12.7%

14.6%

10/27/2006

10.3%

12.0%

11/29/2006

-0.3%

4.8%

12/28/2006

-6.9%

3.4%

1/26/2007

-10.2%

-6.6%

2/27/2007

-3.7%

-1.0%

3/26/2007

-9.8%

-5.5%

4/27/2007

-10.9%

-5.0%

5/29/2007

-11.5%

-6.3%

7/3/2007

-30.0%

-15.6%

7/30/2007

-19.9%

-11.5%

8/30/2007

-12.5%

-8.7%

9/27/2007

-19.0%

-18.2%

11/2/2007

-40.4%

-34.3%

11/28/2007

-40.1%

-38.3%

12/28/2007

-36.3%

-40.0%

1/25/2008

-36.4%

-35.9%

2/26/2008

-51.7%

-41.5%

3/24/2008

-40.9%

-36.8%

4/25/2008

-25.6%

-31.0%

5/28/2008

-22.2%

-33.6%

7/2/2008

-11.7%

-25.3%

7/29/2008

-10.5%

-20.9%

8/29/2008

-13.8%

-17.9%

9/26/2008

-4.3%

-10.0%

10/31/2008

18.7%

13.9%

11/26/2008

50.9%

27.7%

12/26/2008

48.9%

32.3%

1/23/2009

59.3%

36.4%

2/27/2009

92.8%

55.6%

3/27/2009

85.8%

48.1%

4/24/2009

69.7%

45.8%

5/29/2009

31.8%

22.8%

6/29/2009

21.3%

24.0%

7/29/2009

19.5%

15.9%

8/28/2009

7.4%

8.8%

9/25/2009

12.6%

12.4%

10/30/2009

22.7%

18.3%

11/27/2009

24.3%

13.6%

12/31/2009

23.7%

18.1%

1/22/2010

19.0%

20.6%

2/26/2010

18.6%

23.6%

3/25/2010

10.0%

15.4%

4/23/2010

7.1%

11.4%

5/28/2010

19.3%

25.4%

6/29/2010

16.7%

25.7%

7/29/2010

5.4%

20.1%

9/2/2010

7.3%

10.1%

9/24/2010

-4.3%

0.3%

10/29/2010

-2.9%

10.4%

11/26/2010

-8.5%

1.4%

1/3/2011

-11.4%

0.1%

1/28/2011

-7.6%

4.9%

2/25/2011

-5.5%

5.0%

3/24/2011

-4.4%

7.4%

4/21/2011

-16.0%

3.2%

5/27/2011

-12.0%

-0.4%

6/24/2011

-9.5%

5.0%

7/29/2011

-4.3%

8.1%

8/26/2011

12.0%

21.6%

9/30/2011

23.5%

29.6%

10/28/2011

0.4%

11.5%

11/25/2011

13.9%

24.0%

12/29/2011

9.9%

15.9%

1/27/2012

7.4%

16.6%

2/24/2012

7.8%

13.3%

3/23/2012

9.1%

15.2%

4/27/2012

10.5%

15.3%

5/25/2012

26.5%

27.5%

6/22/2012

26.1%

24.6%

7/27/2012

30.4%

25.7%

8/24/2012

26.0%

19.8%

9/28/2012

39.3%

22.1%

10/26/2012

48.3%

28.9%

11/23/2012

45.7%

32.1%

12/31/2012

48.9%

29.4%

1/25/2013

41.4%

22.5%

2/22/2013

40.3%

21.3%

3/28/2013

38.0%

16.7%

4/26/2013

28.8%

16.0%

5/24/2013

21.3%

11.2%

6/28/2013

20.5%

13.2%

7/29/2013

13.0%

8.0%

8/30/2013

12.2%

11.0%

9/27/2013

8.6%

6.5%

10/25/2013

3.7%

2.3%

As noted, this is the sixth straight portfolio to win after 29 straight losses! (that is hard to do... it ain't random). However ALL 11 open portfolios are leading the Russell 3000 (by an average of more than 11 points.

Subsets

I also keep 2 subsets of the larger portfolios: (1) dividend stocks (those with a yield per Yahoo of at least 2.6%) and (2) new stocks (those new to the tracking portfolios in past 12 months. The dividend portfolio was most excellent, up about 37.5%. The new portfolio was solid okay, up 35.9%. Finally, I like to track cash as it is more "honest" than percentages as if you go up by 25% and then down by 25%, that is a different result than up by 5% then down by 5%. So I track what you would have to day if you had spread $100,000 over the first twelve portfolios evenly.

Category

Value

Total

167,823

Total New

170,030

Total Dividend

381,965

Total
Russell 3K

164,019

I am sure my eagle eyed readers have noted that the "Total" is now beating the Russell 3000 total. It has been a long and arduous road, but MFI (by my measure) is officially beating the benchmark!